AMD gaming revenue declined massively year-over-year, CFO says the demand is 'weak'

AMD has posted its earnings for Q1 2024, and yes AI-powered Data Center revenue is up, alongside Ryzen prcoessors. Radeon and gaming is a different story.

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AMD's revenues for Q1 2024 rose to $5.5 billion, a year-over-year increase driven by the incredible demand for all things AI. AMD's 'Data Center' revenue saw an increase of 80% year-over-year to deliver $2.3 billion, with 'Client' revenue seeing a year-over-year increase of 85% in revenue to hit $1.4 billion.

AMD gaming revenue declined massively year-over-year, CFO says the demand is 'weak' 02

Products in AMD's AI Instinct AI GPU lineup, server-grade EPYC CPUs, and the Ryzen 8000 Series of processors for desktops and mobile devices are driving sales and growth. But it's not all sunshine and AI rainbows, as AMD's 'Gaming' revenue saw a massive decline, down 48% year-over-year - which offset AMD's revenue for the quarter.

Gaming covers AMD's PlayStation and Xbox console hardware, Radeon GPUs for PC gaming, and SoC devices that combine Ryzen processing with Radeon graphics. The dramatic decrease in gaming hardware revenue matches Microsoft's recent report stating that Xbox hardware sales decreased by 31% year-over-year.

In its financial report for the quarter, AMD specifically mentions lower AMD Radeon GPU sales and "a decrease in semi-custom revenue" as the reason for the decline. This includes both PlayStation 5 and Xbox Series X|S consoles, which are now entering the second half of their lifespan.

The revenue drop places some uncertainty on the future of AMD's Gaming sector, even though the decrease in semi-custom revenue for consoles was expected to drop. AMD is expected to launch its next-gen RDNA 4-powered GPUs later this year, in addition to providing the boosted GPU hardware found in the PlayStation 5 Pro, so it will be interesting to see what impact this has.

It doesn't matter in the short term. Data Center and Client revenue make up over two-thirds of all AMD revenue, and with both sectors growing strong, AMD is emboldened to continue investing in AI and cutting-edge CPUs.

"We delivered strong first quarter results with our Data Center and Client segments each growing more than 80% year-over-year driven by the ramp of MI300 AI accelerator shipments and the adoption of our Ryzen and EPYC processors," said AMD Chair and CEO Dr. Lisa Su. "This is an incredibly exciting time for the industry as widespread deployment of AI is driving demand for significantly more compute across a broad range of markets. We are executing very well as we ramp our data center business and enable AI capabilities across our product portfolio."

"AMD started the year strong, delivering record quarterly Data Center segment revenue," said AMD EVP, CFO, and Treasurer Jean Hu. "In addition, we drove solid gross margin expansion. Moving forward, we are well positioned to continue driving revenue growth and margin improvement while investing in the large AI opportunities ahead."

"If you look at gaming, demand has been quite weak," Jean Hu added in an analyst call. "That's well known also [they have] inventory issues. We guided down more than 30% in the first and second quarters, and the second half will be lower than the first half. That is how we are looking for the gaming business this year."

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NEWS SOURCES:ir.amd.com, venturebeat.com

Kosta is a veteran gaming journalist that cut his teeth on well-respected Aussie publications like PC PowerPlay and HYPER back when articles were printed on paper. A lifelong gamer since the 8-bit Nintendo era, it was the CD-ROM-powered 90s that cemented his love for all things games and technology. From point-and-click adventure games to RTS games with full-motion video cut-scenes and FPS titles referred to as Doom clones. Genres he still loves to this day. Kosta is also a musician, releasing dreamy electronic jams under the name Kbit.

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